Mercator Lines to enter coal mining business

Mercator Lines, which is possibly the only domestic shipping company to foray into the coal mining business, is now planning to acquire a 50 million tonne coal mine in Indonesia.

Mercator expects to invest $50-75 million (approximately Rs 200-300 crore) for acquisition, a senior company official said. He said that the company is evaluating acquisition options, in terms of quality of coal, coupled with the necessary infrastructure needed to transport this product. Mercator has leveraged its Singapore-based subsidiary Mercator Lines Singapore for its coal mining activities. Mercator Lines’ cash and bank balance at the end of FY08 was Rs 853 crore. Mercator Lines derived nearly 95% of its FY08 net profit of Rs 370 crore from its core shipping business. Almost 15 months ago, Mercator had purchased three coal mines in Indonesia, for an investment of nearly $10 million ( approximately Rs 42 crore). Also earlier this year, it was awarded a coal block in Mozambique, by the local government there. It’s targeting an annual production of nearly one million tonne from their existing Indonesian coal mines during FY09. In order to leverage the opportunities to transport coal from its overseas mines, Mercator Lines also plans to add two more ships with a capacity of 93,500 Dwt (dead weight tonne) each, on a time charter basis, over the next 18 months. The company’s current fleet capacity is 27 vessels, which includes 12 vessels to carry bulk transport.
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